Why Optimization Fails and How to Build Your Financial and Emotional Feedback Loops

Have you spent countless hours running Monte Carlo analyses, studying safe withdrawal rates, and researching complex investment strategies, only to find yourself still stuck? You're searching for the simple answer: Can I retire or not?

After helping countless seven- and eight-figure families gain clarity as they enter retirement, I've seen the same core problem at every level. It's the difference between a family being able to get the most out of the wealth they built and one whose outlook is constantly tied to financial television and daily market swings.

In this post, I'm going to show you how to make a retirement plan that works—a system that focuses on your most precious resource: time. You can also watch the video I made about this topic.

Your Retirement is a Business, Not a Spreadsheet

You need to stop thinking about retirement like a bunch of discrete variables (withdrawal rates, tax forms) that need to be optimized. Instead, map it out like a system.

Business ComponentRetirement EquivalentInput (Raw Material)The capital you saved over your career.ProcessThe decisions you make about allocating your financial capital and time.Output (Profit/Product)Your Satisfaction minus your Expectations.

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If any part of this system is broken—if your inputs are random or your processes are not systematized—it will disrupt everything. Your retirement plan should essentially act as a filter between the critical information you need and the daily noise that distracts you.

Step 1: Identify Your Critical Functions and Goals

You must first identify the major functions in your retirement. While two will be the same for everyone, the rest must be personalized:

Function=Pillar (Goal=Example)
Taxes: (Legally minimize the total amount paid over our lifetime.)
Goals: (Maximize the value of our time and money in retirement.)
Wealth: (Personal: Ensure assets support lifetime spending and leave a legacy.)
Health: (Personal: Maintain fitness to travel comfortably into our 80s.)
Family: (Personal: Deepen relationships and resolve family tension.)

A common mistake is having tasks that don't support the main goal. For instance, wanting to buy a vacation home (task) should be clearly linked to supporting the Family goal (spending time together). If not managed properly, that task could take up too much money or time and actually detract from your main goals.

Step 2: Implement a Quantitative Feedback Loop

Once you have these critical functions and supporting tasks outlined, the next step is the feedback loop. You can't tell if you're off track if you don't measure what's actually happening.

The Best Feedback is Quantitative:

• Actual vs. Plan Spending: Is your withdrawal plan working in the real world versus what's just on your spreadsheet?

• Portfolio Performance vs. Benchmarks: How is your portfolio performing relative to what is appropriate for your risk profile?

• Time Allocation: How are you actually spending your time versus what you said you were going to spend it on (time for adventure vs. time consumed by errands)?

• Overall Satisfaction: Are you truly enjoying your retirement, or are you just worried about the markets all day?

A Real-World Example

I had a client who was supporting adult children while simultaneously taking care of aging parents. This put a huge stress on both their time and their income. By tracking the dollars, we found that because their time was consumed by caregiving, they actually didn't have time for their expensive travel goals. Once we updated the plan to reflect this reality, their financial plan actually looked fine, and they felt much better because the stress came from the feeling of spending, not the numbers themselves.

Step 3: Remove the Main Blocker (The Critical Step)

If you're tracking all this data, what do you do with it? It's all about removing blockages.

• Anxiety about the markets blocks confidence.

• Health concerns block overall wellness.

• Family tension causes strain in relationships.

• Lack of purpose damages overall satisfaction.

Most people try to fix all these things at once, which is unhelpful. Instead, identify the main blocker and fix that first, as these areas are interconnected:

• Fixing market anxiety might free up mental energy for health goals.

• Resolving unclear family expectations might improve money stress.

I always recommend identifying the one thing limiting your satisfaction the most and fixing that first. For one client, constantly watching the market was poisoning other areas. We implemented two simple solutions: automate withdrawals (so he didn't have to think about monthly income) and stop checking accounts daily. Removing that financial anxiety freed up mental energy for him to focus on his health and family.

Building a Retirement That Clicks

That's how you build a retirement plan that actually works. You map out your retirement system, you track your satisfaction, you identify blockers, fix them, measure, and repeat. Eventually, your life is clicking along: your wealth supports your life without constant worry, your time is allocated to meaningful activities, and your relationships deepen.

But you have to clear those blockers first. Don't try to force huge family gatherings without solving unresolved tensions first. Don't book dream trips if market volatility is going to freak you out and ruin the trip. It is under your control.

At Barrett FP LLC, we offer expert financial planning on an hourly basis, focused entirely on helping you achieve your goals.

Learn more about how we can help you build your custom retirement system and see if we're a good fit.